The Brexit Shock. What does it mean for Australia?

By Professor Andrew Walter, Professor Helen Sullivan, Professor Philomena Murray. University of Melbourne

University of Melbourne experts respond to Brexit.

Professor Andrew Walter, Acting Director of the Melbourne School of Government; Professor of International Relations

Most of my friends in the UK are shocked and bewildered by the result of Thursday’s referendum on British membership of the European Union. So am I, but I believe it reflects underlying trends in global politics and economics that have been underway for some time. That the shock has emanated from Britain, perhaps the most conspicuous globalizer of any major country in recent decades, is both unexpected and telling.

The outcome of the referendum is only the latest indication that many voters see the globalization project as an elite agenda that has left many ordinary citizens in advanced countries behind. As in many other countries, Britain's political and business establishment has paid far too little attention to globalization’s domestic distributional consequences and to the lingering and disproportional impact of the 2008-9 crisis on middle and lower income households. The Panama Papers were the latest in a series of revelations that suggested that the elite, this time including Cameron’s own father, were benefitting disproportionately whilst failing to pay their fair share of taxes. A large swathe of voters that gained little from the boom that began in the mid-1990s also suffered most from the excessive austerity adopted by the Coalition government since 2010. The Labour Party under Jeremy Corbyn failed to provide a strong narrative in favour of EU membership, and to make clear to these disaffected voters that the main cause of their problems was not Brussels, but Westminster. The lack of investment in public services, especially in the second and third tier cities that have experienced large inflows of migrants over the past decade, has meant that the net national benefits of immigration and access to the EU market seem to have accrued to others. These voters rightly feel abandoned by mainstream politicians, but they have been encouraged by some politicians and the tabloid press to blame foreigners instead.

The UK referendum, blithely offered by Cameron before the last election, thus became an unmissable opportunity to send a message to Westminster that globalization has not worked for them. That Brexit will likely impose most costs on those who voted Leave seems, to the surprise of many, not to have mattered a great deal. It used to be thought that appeals to voters’ economic self-interest were the key to winning elections. This worked for the Cameron-Osborne partnership only a year ago in the last UK election and they believed that it would ensure victory in the EU referendum. But this message was drowned out by soundbite politics and undermined by deep public distrust of politicians and the commentariat. This distrust was only exacerbated by the series of untruths systematically repeated on both sides even when patently at odds with the facts. The opportunity for serious debate and public education about Britain’s role in the EU and the world was lost more or less from the start. The Leave campaign was by a large margin the worst offender, offering a mixture of untruths about the net costs of EU membership, empty claims about the benefits of “sovereignty", and no credible alternative strategy. At its core was an unholy alliance of ambitious politicians who read the popular mood, delusional globalizers, and UKIP, which has successfully stoked anti-immigrant xenophobia among traditional Tory and Labour voters.

The Tory leaders of Leave, lacking a strong case for EU exit, sought to neutralize the close to unanimous opinion of economic and strategic experts that Brexit would be punishingly costly for the country. Michael Gove’s assertion that voters have “had enough of experts” encapsulated this approach. They systematically dismissed serious economic analysis by the Bank of England, the London School of Economics, the Institute for Fiscal Studies, the OECD and the IMF, among others, with the artful slogan “Wrong Then, Wrong Now” (a reference to the failure of these institutions to predict the GFC). Such demagoguery is the last thing any democracy needs from “leaders” in an era of vast challenges and great complexity. It also involved a basic category mistake: it is far easier to analyze the consequences of a known event than to predict the timing of a once in a century crisis. In economic terms, the GFC was more like the meterological equivalent of an exceptionally destructive storm (such as that which hit Britain in 1987); Brexit, by contrast, is the equivalent of moving the British Isles five degrees further north. Its predictable effect will be to chill the economy and to diminish Britain’s influence in the world. Both effects are already underway.

Brexit

Faced with this motley opposition, one can see why Cameron believed that he would easily win. But the Conservative Party’s infighting and longstanding failure to articulate the large benefits to Britain of EU membership, combined with a weak Labour Party leadership, resulted in a political miscalculation of historic proportions. The globalizers in the Leave campaign have unleashed forces that will make it difficult for them to retain control. In any case, they will be spending most of the next decade in a damage control exercise with former EU partners for which they have shown little preparation or understanding. Most obviously, if they are compelled for domestic political reasons to limit immigration, this rules out the “Norway” option in which British goods and services, on which the UK is unusually dependent, could enjoy continued full access to the largest market in the world.

In short, Brexit amounts to a major retreat of Britain – before long probably without Scotland – from global economic and political leadership. It will be anything but a resurgence. It has given a considerable boost to right wing nationalism across Europe at the worst possible time, when mainstream parties of the centre-right and centre-left are losing support. If these mainstream parties respond by adopting parts of the nationalists' agenda, the postwar European project could rapidly unravel. France is perhaps the largest worry. Things would be greatly worsened by a Trump victory in the United States in November, though at present this seems unlikely. Even a more internationalist Clinton presidency will find a more insular Britain a less useful partner than in the past, and Britain’s departure will increase the political distance between America and Europe. This presages a more unstable world from which smaller countries such as Australia will hardly benefit.

The short term electoral impact on Australia will probably be modest. The Turnbull government is portraying the global economic turmoil that has predictably followed the UK referendum result as reinforcing the need for policy continuity. But Coalition claims that votes for Green and independent candidates will result in “chaos” sound overblown and echo the UK Conservative government’s assertions about the consequences of a vote for Brexit, claims that were widely regarded as untrustworthy. Now that visible chaos in financial markets has materialized, some swing voters in Australia may be more receptive to the Coalition’s stability message (just as some British voters may now be feeling buyers’ remorse). However, emphasizing policy continuity has obvious drawbacks for the Prime Minister, since his inability clearly to differentiate his government from that of Tony Abbott has disappointed many who hoped for substantive change. Those voters who have been uninspired by either of the major parties are unlikely to switch their first preference vote due to Brexit, though the government may now gain more second preferences at the margin. Whatever the outcome, no future Australian government will be insulated from the consequences of Brexit, which will continue to reverberate in domestic and international politics in ways that for the most part will be highly damaging.

Professor Helen Sullivan, outgoing Director, Melbourne School of Government

We’ve had enough of experts’. Michael Gove’s (a leading member of the Leave Campaign) wholesale dismissal of the contribution of those with technical or specialist knowledge to the debate about Brexit was one of the most telling moments of the whole campaign. It was a statement that at one and the same time created an apparent allegiance between ‘ordinary people’ and the political elite of the Leave Campaign, while casting the political elite of the Remain Campaign as in thrall to experts and so out of touch with the thoughts and feelings of ‘ordinary people’.

Much has been made of what the process and result of the UK EU referendum suggests about the state of politics in the UK. Attention focuses on the disconnect between those in the ‘Westminster bubble’ and those who feel that they have been taken for granted by the political elites while also being left behind in economic and social terms. This narrative is familiar in advanced democracies in Europe and North America where populism and nationalism are on the rise. But the Brexit referendum illuminated a particular dimension of this disconnection – the rejection of expertise and the embracing of a ‘post-truth’ politics.

This should worry democrats and public policy makers in Australia where we have our own experience of the rejection of expertise, most vividly in the debate about climate change. And where the reign of ‘shock-jocks’ promotes a particular kind of political exchange that is rarely afforded the luxury of nuance.

However nuance is precisely where we need to start in any discussion about expertise, democracy and decision-making. This is because the discussion of experts and expertise is not as simple as we might like but also because a fuller appreciation of the nature of expertise is essential for making better decisions and public policy.

Traditionally expertise is associated with a high level of technical knowledge or skill coupled with considerable experience. The economists, financial analysts and even historians who were the source of Michael Gove’s ire fit with this definition. But in public policy we have acknowledged that there are other sources of expertise that don’t fit this definition but are important for making good decisions. ‘Lay expertise’ is expertise derived from the lived experience of something  - a disability, extreme disadvantage, or discrimination. Public policy makers now habitually engage with ‘lay experts’ in the design of policy and services, most recently in Australia in the design of the NDIS, in order to make better use of public money.

If we acknowledge that there is more than one kind of expertise then policy makers have to find ways of accessing them, engaging with them and when necessary adjudicating between them. Numerous different kinds of mechanisms now exist to do this, some formal and highly technical such as Citizens’ Juries, others more straightforward such as consultative panels. Again Australia has many examples of these more deliberative processes of debate. Often disagreements will generate heated debates about whose expertise is more expert and should have more influence. There are also differences in how debate is conducted with some experts claiming their ‘rationality’ should trump other experts’ ‘emotive’ contributions. Resolution is a political act that is itself nuanced.

Brexit unravelling

One of the challenges of broadening our understanding of expertise is the way in which ‘truth’ is quickly invoked to defend or attack a particular position. I have written about this elsewhere in connection with the evidence-based policy movement and it is not surprising to see this now emerge in the claims about a ‘post truth’ politics. However there is an important difference between the two situations.

Accepting different kinds of expertise as legitimate and valid means acknowledging that in policy and politics there may be different ‘truths’ depending on standpoint – though all require evidence to support them. A ‘post-truth’ politics on the other hand seems to rely on the persuasiveness of the speaker or the medium regardless of the robustness of the evidence base.

Commentators on the Brexit referendum are already analysing what might be learned from the process and how to reconnect the disconnected to the elite. There is much here that will be familiar to Australians from the need for a more authentic narrative, a political class that listens to and acts on the wishes of its citizens (rather than focusing only on the marginal voters), and political institutions that are more representative and inclusive.

These are all sound proposals and overdue in both the UK and Australia. However they will be insufficient if they do not also address both the importance of expertise in informed democratic debate and the many kinds of expertise that can help enhance our democracies.

Professor Philomena Murray, School of Social and Political Sciences and EU Centre on Shared Complex Challenges

When the UK joined the EU in 1973, there was considerable concern among Australian policy and media circles. There was talk of Australia having been betrayed by the British as they did not support Australia’s requests for market access for its primacy goods such as beef and lamb. What a difference a few decades make! The Australian government made it clear that it supported the UK remaining in the EU. In fact the relationship with the EU is particularly fruitful and comprehensive at present. There has never been a better time for Australia to engage with the EU!

After decades of tension and acrimony regarding agricultural trade, Australia has developed a productive relationship with the EU – so much so that Australia negotiated a high level Framework Agreement with the EU, now about to be signed. This all-of-government accord ranges from trade to education to crisis management to common concerns in the Asia Pacific. This is the most significant agreement ever signed by Australia with the EU. Recent discussions regarding a Free Trade Agreement with the EU have been progressing well.  

So where does the Brexit leave Australia? What does it mean for the relationship with the UK and the relationship with the EU? Can Australia and the UK forge closer ties outside of the EU framework?

The new Framework Agreement would not apply to the UK and so the UK will be obliged to work on a similar deal with the newly elected Australian government. This is because the UK will now have to negotiate entirely new bilateral deals with countries such as Australia on trade and market access. It is also expected to withdraw from all the previous agreements that have been negotiated by the EU with Australia.

Vote Leave

Many Australian companies have their European headquarters in the UK. It is now possible that the UK will no longer be as pivotal as a financial centre for Australia.  It will be less attractive as a base for Australian companies and as a springboard to the rest of Europe.

The new Australian government, once elected, will seek to promote and protect Australian interests with all the member states of the EU and to work with the national capitals in Europe. Yet it no longer has the option of potentially regarding the UK as a sounding board on EU issues, given the UK exit. It will not have access to UK support for advocacy for Australian interests and concerns with the rest of the EU. On neoliberal trade issues, the UK and the current Australian government had similar views and so Australia will experience the loss of a like-minded neoliberal free trade ally.

Former Minister Julie Bishop told David Cameron last week that ‘Australia believes it would be in our interest if a strong United Kingdom remained a part of the European Union’ and said ‘a strong UK as part of the European Union would be in Australia's interests’. This is no longer the case. Australia and the EU have forged strong cooperation on some security issues and it is likely that that Australia will seek to ensure that it maintains firm engagement and regular dialogue through other forums such as the Australian special relationship with NATO and existing annual bilateral defence talks.

Certainly the former Foreign Minister, Alexander Downer, now Australian High Commissioner to the UK has expressed concern regarding the uncertain impact on Australia’s £5 billion trade relationship with the UK.

The political parties in the current election in Australia will need to develop fresh strategies to deal with the UK on a new bilateral footing, especially in those policy areas where the UK shared policymaking competences with its partners within the EU. The parties will need to examine the implications of the fruitful relationship with the EU, which is reeling from the prospect of the imminent exit of a major international player. The two putative Prime Ministers – Malcolm Turnbull and Bill Shorten – would be well advised to reassure the electorate both that the relationship with the EU remains solid and that the longstanding historical and cultural ties with the UK will be renewed. The Brexit presents no advantage to Australia – its government, businesses, the university sector for example - at a time of financial instability. The future Prime Minister will have a new set of unexpected challenges to deal with over the next few months in particular, as he forges a new relationship with the new British Prime Minister to replace David Cameron in October. There will be scope to consider a new type of strategic engagement with the UK across a broad range of policy areas. There is scope for continued cooperation between Australia and the UK in multilateral forums such as the UN and the WTO as well as the G20. The new Australian Prime Minister will also need to safeguard the shared values and common interests in the Framework Agreement with the EU are strengthened. He will need to reassure the voters that the FTA negotiations with the EU will provide exciting opportunities for Australia in the hard bargaining that will take place over the next few years.

Professor Philomena Murray is the author of a major book and several studies of Australia’s relationship with the EU. She has also written this article, published on: Brexit: Over and Out

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